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“…Ask and you shall receive…”
The overriding theme of capital being available to existing companies continues. Both DHT Holdings Inc. (“DHT”) and Teekay Tankers Ltd successfully concluded overnight follow-on equity offerings last week and both were well received.
DHT initially announced plans to offer 8 million shares in an underwritten public offering, “subject to market conditions.” Market conditions were certainly good with the transaction approximately 3 times oversubscribed. The offer was upsized approximately 93% to 15.5 million shares, which included an exercised underwriter’s option to purchase up to 2.025 million shares to cover overallotments. The shares were offered at a discount range of 8-10% of the closing price on February 3rd of $5.08. The strong demand resulted in the transaction being priced at $4.65/share equal to a discount of 8.4%. Proceeds will be used for general corporate purposes, which may include, without limitation, vessel acquisitions, business acquisitions or other strategic alliances, reduction of outstanding borrowings, capital expenditures and working capital.
Skunked in New York, Success Outside
Having been unsuccessful in New York in its efforts to sell up to $400 million of ten-year senior unsecured notes in December, Ship Finance International Limited played it safe and stayed closer to home in its latest capital raising effort. The earlier effort, which was tied to a tender offer for its 8.5% Senior Notes due 2013, was stymied by weakening market conditions in the debt capital markets due to the sovereign debt issues in Ireland. Although investors pulled back from the new issue market, the Ship Finance story, we understand, was well received. In concluding our story, we wrote: “Now more than ever, in a world where information flows at the speed of light, it is not merely fundamentals that determine your future, but macro events as well. A quiet news week may be just what the doctor ordered.”
Equity without Dilution – Seaspan’s Mantra
Last week, we reported on the launching of Seaspan Corporation’s preferred stock issue, which priced last Friday. The company sold 10 million shares of its 9.50% Series C Cumulative Redeemable Perpetual Preferred Shares, par value $0.01 per share, liquidation preference $25.00 per share. Net proceeds to the issuer were $241,250,000. Details of the transaction are shown below in the Guts of the Deal.
Preferred Shares from Seaspan
On Wednesday, Seaspan Corporation, utilizing its $1billion shelf registration, filed a preliminary prospectus supplement for a public offering of its Series C Cumulative Redeemable Perpetual Preferred Stock (“Preferred Shares”). The number of shares being offered was not disclosed; however, the liquidation preference is $25 per share. Proceeds will be used for general corporate purposes, which may include vessel acquisitions or investments. Pending the application of funds for these purposes, the company may prepay a portion of its outstanding debt under certain of its revolvers. Following the offering, Seaspan intends to file an application to list the shares on the New York Stock Exchange.
And the Winner is….the Syndication Market
Last quarter, we went out on a limb, a pretty sturdy one we must confess, and called a turn in the downward trend in the syndication market, based upon a 9.8% increase in volume. Thankfully, we were correct, but the result was unexpected. According to Dealogic, for the twelve months ending in 2010, total syndicated shipping volume was $50.06 billion, an increase of 53.2% over 2009. The ancillary data provided by Dealogic strongly supports this revival, as well as an improving credit environment. As shown below, new money raised nearly doubled from the prior year but what is more significant is that it represented ~76% of new volume whereas in the prior year it was only 59%. The dollar amount of club deals was virtually unchanged, which had the effect of reducing the percentage of club deals as a portion of total volume from 42% in 2009 to approximately 30% in 2010. These trends can be seen in the enclosed graphs.
And the Winner is….the Syndication Market
Last quarter, we went out on a limb, a pretty sturdy one we must confess, and called a turn in the downward trend in the syndication market, based upon a 9.8% increase in volume. Thankfully, we were correct, but the result was unexpected. According to Dealogic, for the twelve months ending in 2010, total syndicated shipping volume was $50.06 billion, an increase of 53.2% over 2009. The ancillary data provided by Dealogic strongly supports this revival, as well as an improving credit environment. As shown below, new money raised nearly doubled from the prior year but what is more significant is that it represented ~76% of new volume whereas in the prior year it was only 59%. The dollar amount of club deals was virtually unchanged, which had the effect of reducing the percentage of club deals as a portion of total volume from 42% in 2009 to approximately 30% in 2010. These trends can be seen in the enclosed graphs.
APM Goes Back to the Bond Market
Having had its first taste last year, A.P. Moller-Maersk (“APM”) returned to the public bond market a couple of weeks ago, issuing EUR 500 million of 7-year bonds with a coupon of 4.375%. The net proceeds will be used for general corporate purposes. Unsurprisingly, investor interest was strong with the bonds being more than three times oversubscribed. As a point of comparison, last year’s issue of EUR 750 million 5-year bonds carried a coupon of 4.875%. Placed by Barclays Capital, BNP Paribas, Danske Bank, HSBC and RBS, the bonds will be listed on the Luxembourg Stock Exchange.
Yes, There Was Equity Too
China’s inflation and Ireland’s banking crisis triggered this week’s market volatility. Nevertheless, Scorpio Tankers Inc. and Navios Maritime Acquisition Corporation (“NMA”) moved ahead with equity follow-on offerings. Scorpio’s registration was for a one-off transaction, whereas Navios’ was a supplement to its recently filed broad shelf registration.
Who Wants to Call the Turn?
We might. While the data may be considered slim and possibly distorted by the $6.75 billion A.P Moller-Maersk transaction, the nine-month 2010 Dealogic shipping data intimates a reversal in the downward trend in syndicated lending which began in 2007. Not only were the number of syndicated deals, volume and new money higher, club deal volume and numbers were down. The latter of course might just reflect deal size, where five of the top fifteen deals were in excess of $1 billion, but we will give the data the benefit of the doubt. In terms of specifics, the number and volume of deals for the 9-months of 2010 was 110 deals totaling $28.4 billion versus the one year earlier total of 90 deals totaling $25.9 billion. The best way to see the trend over time is to look at the data, which we show pictorially below. And, yes, you needn’t remind us that one point does not make a trend.
US Capital Markets Fuel Corporate Activity – Wall Street Firms Execute For Clients
Marine Money Capital Market League Tables Highlight
DnB NOR, Deutsche, Citi and Jefferies
Marine Money’s survey of the global banking community in the spring told a dramatic story. Banks prefer lending to and doing business with public shipping companies. Transparency, performance and the simple fact that public company managements with their access to capital have been among the most active in the business – that activity of course translates into fees – makes the case that capital markets access and execution capability are important skills. We celebrate here the Capital Markets performance of the leading Wall Street banks and their first half contributions to the shipping community.
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